April 7 2011
A reader (Gabriel from Portland) playfully chided me recently and said, “You never ask for comments.” He’s right, I don’t ask for comments. But, I surely do appreciate it when people do comment. Talking to yourself can be lonely.
With Gabriel in mind, instead of doing my traditional op-ed and declaration of opinion as fact, I’m going to lay out some thoughts and then some third-party contextual information and maybe we can have some fun in the comments section today.
First, it’s my impression that the U.S. wine industry is politically bi-polar in ways that defy easy description.
On the one hand, the prevailing sentiment in the wine business from a macro perspective is socially liberal. It’s soft, it’s touchy, it’s artsy and inclusive of all of God’s creatures. Yet, on the other hand, when it comes to the dirt, growing grapes, and protecting nature, hidebound neo-conservative traditionalists rule the day. Ask anybody trying to navigate the labyrinth of red tape for a new vineyard development in Napa or Sonoma. So, how to explain these polar opposite perspectives between progressive and preservation? I’m not sure, but I think the coming two decades will tell the tale.
Recently, I’ve been reading a lot of dry-as-dirt information about global population growth. I’m fascinated by the explosive growth of wine in China and the eye-popping auction sales numbers that follow by press release nearly every week. For example, Acker, Merrall & Condit, the world’s largest wine auction house, sold over $10M in wine in Hong Kong over two days in late March, selling 99% of the available 1,080 lots for sales. Their success is not an isolated incident and China is just one leading edge indicator of the globalization that will occur in wine in the next several decades.
Here are a couple of excerpts from Trendwatching.com’s report on the future of urban consumption as well as McKinsey and Company reports on global economic growth in urban environments:
* 50.5% of the world is already urbanized
* By 2050, the global population living in an urban environment is expected to be 70%
* By 2030 China and India will have a combined total of 289 cities with a population exceeding one million people. During this period, 615 million people will move into these urban environments exceeding the U.S. population in its entirety by nearly double.
* 400 midsize cities in emerging markets—cities that most of us have never heard of—are poised to generate nearly 40 percent of global growth over the next 15 years.
* For every 1% increase in urbanization in China, the country can expect a 1.6% increase in the contribution to their gross domestic product (GDP).
The prognostications are nearly universal – rural flight and population movement into urban environments in economically emerging countries like China and India is fueling growth, innovation, and wealth, re-balancing a global world axis that has always leaned towards the west. This urbanization and increase in the quality of life as measured by economic wherewithal is driving an acquired taste for the trappings of Western middle-class life, including wine – a worldwide symbol of the good life dating back thousands of years.
Net-net: the wine world we live in will be radically different 10 years from now and, perhaps, unrecognizable to us 30 years hence. And, this has all sorts of implications on the U.S. wine industry not the least of which is the aforementioned progressive sensibility countered by a traditional sense of agricultural stewardship. A yin and a yang that may not always be in balance in the future.
To kick off the comments, here are a couple of thoughts/questions for you to react to:
* After-market wine auctions are getting the headlines; will the domestic wine business move to capitalize on expanding markets (be progressive) or sit on their hands (be traditional) till markets develop further?
* What will be the hottest job title in the wine business in the next 10-20 years?
* With increasing urbanization and the fine dining that is associated with cities, what role do you think Sommeliers will play in the future as wine tastemakers?
* India and China are both societies with hierarchical structures that accord respect to expertise and elders. Will this continue the proliferation of the role of the wine critic?
* Do you think a Western wine critic is likely to assume this role in developing, global wine markets or will it be a native to that specific country?
* With international urbanization comes a specific set of needs, will the domestic wine industry systematically move to brand development that resonates globally instead of a “sense of place” that is focused on their dirt?
* Will small production, “cult” wineries allocate their wines to where they can command the most money (and profit) or will they stay true to their domestic roots and the customers that got them there?
* If the upper echelon of U.S. wineries focus globally, does that open up an opportunity for U.S. consumers to more readily find and engage with wineries from emerging U.S. regions – the Finger Lakes, Michigan, Virginia?
* What thoughts do you have about global urbanization and the impact it may have on focus, production, marketing or criticism compared to our current state?
Thanks, in advance, for your thoughts in the comments section!
Additional reading on global urbanization: